Luck of the Irish
17th November 2010
Following the fall out of the financial crisis which started in September 2008 a basket of Eurozone countries were considered weakened economically. The countries: Portugal, Italy, Ireland, Greece and Spain affectionately became known as the PIIGS. As these countries used the Euro as their currency, they were unable to employ independent monetary policy in order to help battle the economic downturn.
Much has been made of Greece and its need to receive a bailout from the European and International Monetary Fund (IMF) during the first week in May but the fears have now turned more to Ireland. The mention of Ireland is therefore not unexpected but the extent of a possible bailout is causing nervousness in the market.
Ireland is currently in talks with IMF officials about a bailout that would shore up the state’s finances as well as enable it to inject capital into the country’s banks a European official has said.
The talks could lead to a two-part funding package which would mean Ireland wouldn’t have to tap the bond market for an extended period as it tries to cut the budget deficit. It would also give the Government capital to help banks if necessary. Ireland says it’s fully funded into mid-2011.
Whilst Ireland is a 1 hour flight from Bristol and the Irish are our biggest trade partners in Europe the countries do not share the same currency. At Compton Row we have put together a range of portfolios to diversify the effects of the actions of one foreign country or currency zone. Our defensive portfolio contains limited exposure to European equities through expertly managed multi-manager funds. For our speculative portfolio we favour exposure to Asian equities with more modest exposure to America and Europe for diversification. The portfolios in between these two risk levels have been constructed using the latest financial modeling tools to ensure that each of our clients has a level of return and volatility that is acceptable to them.
Government to raise state pension, end means-testing & give ‘free money’
25 October 2010
The Government is to create a universal state pension of £140 a week, eliminating the current means-tested system.
The plans, set to be announced in a green paper later this year, look set to combine all current elements of the state pension, including the basic state pension and the state second pension, into one payment above the current level of pension credit. The move would address the wide-spread concerns raised that Nest would be undermined by means-testing.
Currently, a single person can receive £97.65 a week and a couple £156.15, with extra means-tested payments to the poorest pensioners leading to single person payouts of up to £132.50. Under the new regime a single person could receive £7,280 a year and a couple £14,560.
The Government believes it can save £6bn by cutting the bureaucracy around means-testing, according to reports.
Pensions minister Steve Webb has long campaigned for a citizens’ pension.
A Department for Work and Pensions spokeswoman says: “We will be bringing forward proposals for reform in a green paper later this year. Our aim will be a simple, decent state pension for future pensioners, which is easy to understand, efficient to deliver and affordable.”
The Saga Group director general Ros Altman says; “After years of watching our pension system falling apart, it seems that the Coalition Government’s new Pensions Minister, Steve Webb, may finally be getting to grips with the inadequacies of the UK state pension.”
Government plans to reform the basic state pension could result in a two-year contracting-out “bonanza” and could involve the abolition of the state second pension by the end of this Parliament.
Depending on the terms of the review, this news could mean a last bonanza for contracting out into a money purchase pension. For the next two years investors can still receive rebates into their Sipps or personal pensions.
If they are ultimately going to receive a universal state pension benefit then these rebates could be ‘free’ money.
Final salary scheme members could see National Insurance payments rise by 1.6 per cent as a result of the reforms, McPhail adds. Public sector workers, who are already facing a 3 per cent increase in contributions following Lord John Hutton’s independent report, will be particularly affected.
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